[Federal Register Volume 80, Number 196 (Friday, October 9, 2015)]
[Notices]
[Pages 61262-61266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-25760]



[[Page 61262]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-31860; File No. 812-14365]


Harvest Capital Credit Corporation, et al.; Notice of Application

October 5, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under sections 17(d) and 
57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d-
1 under the Act to permit certain joint transactions otherwise 
prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 
under the Act.

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Summary of Application:  Applicants request an order to permit a 
business development company (``BDC'') to co-invest in portfolio 
companies with certain affiliated investment funds and certain 
affiliated persons' proprietary accounts.

Applicants:  Harvest Capital Credit Corporation (``HCC''); HCAP 
Advisors LLC (the ``BDC Adviser''); JMP Credit Advisors LLC 
(``JMPCA''); JMP Group LLC (``JMPG LLC''), JMP Group Inc. (``JMPG''), 
JMP Capital LLC (``JMP Capital''), JMP Credit Corporation (``JMP 
Credit''), and JMP Holding LLC (``JMP Holding'' and together with JMPG 
LLC, JMPG, JMP Capital, and JMP Credit, the ``JMPG Companies'').

Filing Dates:  The application was filed on October 1, 2014, and 
amended on February 11, 2015, and June 2, 2015.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on October 30, 2015, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5, hearing requests should 
state the nature of the writer's interest, any facts bearing upon the 
desirability of a hearing on the matter, the reason for the request, 
and the issues contested. Persons who wish to be notified of a hearing 
may request notification by writing to the Commission's Secretary.

ADDRESSES: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: 
Richard Buckanavage, Harvest Capital Credit Corporation, 767 Third 
Avenue, 25th Floor, New York, NY 10017; Steven Boehm, Esq., and Harry 
Pangas, Esq., Sutherland Asbill & Brennan LLP, 700 Sixth Street NW., 
Suite 700, Washington, DC 20001-3980.

FOR FURTHER INFORMATION CONTACT: Anil K. Abraham, Senior Special 
Counsel, at (202) 551-2614 or James M. Curtis, Branch Chief, at (202) 
551-6712 (Chief Counsel's Office, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. HCC is a Delaware corporation organized in February 2011 as a 
closed-end management investment company that has elected to be 
regulated as a BDC under section 54(a) of the Act.\1\ HCC's Objectives 
and Strategies \2\ are to generate both current income and capital 
appreciation primarily by making direct investments in the form of 
subordinated debt, senior debt, and minority equity investments in 
privately-held, small to mid-sized U.S. companies. The board of 
directors of HCC (the ``HCC Board,'' and together with any board of 
directors of a Future Regulated Fund (defined below), the ``Boards,'' 
and each, a ``Board,'' as applicable) is composed of five directors, 
three of whom are not ``interested persons,'' as defined in section 
2(a)(19) of the Act (``Non-Interested Directors''), of HCC. Each 
Regulated Fund invests or intends to invest its assets so as to qualify 
for U.S. federal income tax treatment as a regulated investment 
company.
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    \1\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in sections 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
    \2\ ``Objectives and Strategies'' means a Regulated Fund's 
(defined below) investment objectives and strategies, as described 
in the Regulated Fund's registration statement on Form N-2, other 
filings the Regulated Fund has made with the Commission under the 
Securities Act of 1933 (the ``Securities Act''), or under the 
Securities Exchange Act of 1934, and the Regulated Fund's reports to 
shareholders.
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    2. JMPG was incorporated in Delaware in January 2000 and completed 
its initial public offering in May 2007. On January 1, 2015, JMP Merger 
Corp., a Delaware corporation and wholly-owned subsidiary of JMPG LLC, 
merged with and into JMPG, with JMPG as the surviving entity. 
Consequently, JMPG LLC replaced JMPG as the publicly traded company, 
and JMPG LLC's common stock is currently listed on the New York Stock 
Exchange under the symbol ``JMP.''
    3. JMPG LLC is a Delaware limited liability company and, together 
with its subsidiaries, is a full-service investment banking and asset 
management firm that provides investment banking, sales and trading, 
and equity research services to corporate and institutional clients, 
and alternative asset management products and services to institutional 
investors and high net-worth individuals. JMPG, JMP Capital, JMP 
Credit, and JMP Holding are direct or indirect wholly-owned 
subsidiaries of JMPG LLC.
    4. The JMPG Companies, from time to time, may hold various 
financial assets in a principal capacity (together, in such capacity, 
``Existing JMPG Proprietary Accounts,'' and together with any Future 
JMPG Proprietary Account (defined below), the ``JMPG Proprietary 
Accounts'').
    5. The BDC Adviser and JMPCA are Delaware limited liability 
companies registered with the Commission as investment advisers under 
the Investment Advisers Act of 1940 (the ``Advisers Act''). The BDC 
Adviser is a majority-owned subsidiary of JMPG LLC. The BDC Adviser 
serves as investment adviser to HCC and manages HCC's portfolio in 
accordance with HCC's Objectives and Strategies. JMPCA, a wholly-owned 
subsidiary of JMPG LLC, serves as the administrator to HCC. JMPCA also 
serves as investment adviser to several collateralized loan obligation 
vehicles (``CLOs'') and manages the portfolios of the CLOs.
    6. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \3\ and/or one or more Affiliated Funds \4\ to

[[Page 61263]]

participate in the same investment opportunities through a co-
investment program (the ``Co-Investment Program'') where such 
participation would otherwise be prohibited by section 17(d) or section 
57(a)(4) and rule 17d-1 by (a) co-investing with each other in 
securities issued by issuers in private placement transactions in which 
an Adviser negotiates terms in addition to price; \5\ and (b) making 
additional investments in securities of such issuers, including through 
the exercise of warrants, conversion privileges, and other rights to 
purchase securities of the issuers (``Follow-On Investments''). ``Co-
Investment Transaction'' means any transaction in which a Regulated 
Fund (or its Wholly-Owned Investment Sub, as defined below) has 
participated together with one or more other Regulated Funds and/or one 
or more Affiliated Funds in reliance on the requested Order. 
``Potential Co-Investment Transaction'' means any investment 
opportunity in which a Regulated Fund (or its Wholly-Owned Investment 
Sub) could not participate together with one or more Affiliated Funds 
and/or one or more other Regulated Funds without obtaining and relying 
on the Order.\6\
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    \3\ ``Regulated Fund'' means HCC and any Future Regulated Fund. 
``Future Regulated Fund'' means any closed-end management investment 
company (a) that is registered under the Act or has elected to be 
regulated as BDC, (b) whose investment adviser is an Adviser, and 
(c) that intends to participate in the Co-Investment Program 
(defined below). The term ``Adviser'' means (a) the BDC Adviser and 
JMPCA and (b) any future investment adviser that controls, is 
controlled by or is under common control with JMPG LLC and is 
registered as an investment adviser under the Advisers Act.
    \4\ ``Affiliated Fund'' means the Existing JMPG Proprietary 
Accounts, any Future JMPG Proprietary Accounts, and any Future 
Affiliated Funds. ``Future JMPG Proprietary Account'' means any 
direct or indirect, wholly- or majority-owned subsidiary of JMPG LLC 
that is formed in the future and, from time to time, may hold 
various financial assets in a principal capacity. ``Future 
Affiliated Fund'' means any entity (a) whose investment adviser is 
an Adviser, (b) that would be an investment company but for section 
3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate 
in the Co-Investment Program.
    \5\ The term ``private placement transactions'' means 
transactions in which the offer and sale of securities by the issuer 
are exempt from registration under the Securities Act.
    \6\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
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    7. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subs.\7\ Such a subsidiary 
would be prohibited from investing in a Co-Investment Transaction with 
any Affiliated Fund or Regulated Fund because it would be a company 
controlled by its parent Regulated Fund for purposes of section 
57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned 
Investment Sub be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be 
treated, for purposes of the requested Order, as though the parent 
Regulated Fund were participating directly. Applicants represent that 
this treatment is justified because a Wholly-Owned Investment Sub would 
have no purpose other than serving as a holding vehicle for the 
Regulated Fund's investments, and, therefore, no conflicts of interest 
could arise between the Regulated Fund and the Wholly-Owned Investment 
Sub. The Regulated Fund's Board would make all relevant determinations 
under the Conditions with regard to a Wholly-Owned Investment Sub's 
participation in a Co-Investment Transaction, and the Regulated Fund's 
Board would be informed of, and take into consideration, any proposed 
use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If 
the Regulated Fund proposes to participate in the same Co-Investment 
Transaction with any of its Wholly-Owned Investment Subs, the Board of 
the Regulated Fund will also be informed of, and take into 
consideration, the relative participation of the Regulated Fund and the 
Wholly-Owned Investment Sub.
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    \7\ The term ``Wholly-Owned Investment Sub'' means an entity (i) 
that is wholly-owned by a Regulated Fund (with the Regulated Fund at 
all times holding, beneficially and of record, 100% of the voting 
and economic interests); (ii) whose sole business purpose is to hold 
one or more investments on behalf of the Regulated Fund; (iii) with 
respect to which the Regulated Fund's Board has the sole authority 
to make all determinations with respect to the entity's 
participation under the conditions of the application; and (iv) that 
would be an investment company but for section 3(c)(1) or 3(c)(7) of 
the Act.
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    8. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the applicable Adviser will consider only the 
Objectives and Strategies, investment policies, investment positions, 
capital available for investment, and other pertinent factors 
applicable to that Regulated Fund. The Regulated Fund Advisers expect 
that any portfolio company that is an appropriate investment for a 
Regulated Fund should also be an appropriate investment for one or more 
other Regulated Funds and/or one or more Affiliated Funds, with certain 
exceptions based on available capital or diversification.\8\
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    \8\ The Regulated Funds, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    9. Other than pro rata dispositions and Follow-On Investments as 
provided in Conditions 7 and 8, and after making the determinations 
required in Conditions 1 and 2(a), the Adviser will present each 
Potential Co-Investment Transaction and the proposed allocation to the 
directors of the Board eligible to vote under section 57(o) of the Act 
(``Eligible Directors''), and the ``required majority,'' as defined in 
section 57(o) of the Act (``Required Majority'') \9\ will approve each 
Co-Investment Transaction prior to any investment by the participating 
Regulated Fund.
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    \9\ In the case of a Regulated Fund that is a registered closed-
end fund, the Board members that make up the Required Majority will 
be determined as if the Regulated Fund were a BDC subject to section 
57(o).
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    10. With respect to the pro rata dispositions and Follow-On 
Investments provided in Conditions 7 and 8, a Regulated Fund may 
participate in a pro rata disposition or Follow-On Investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Fund and 
Affiliated Fund in such disposition is proportionate to its outstanding 
investments in the issuer immediately preceding the disposition or 
Follow-On Investment, as the case may be; and (ii) the Board of the 
Regulated Fund has approved that Regulated Fund's participation in pro 
rata dispositions and Follow-On Investments as being in the best 
interests of the Regulated Fund. If the Board does not so approve, any 
such disposition or Follow-On Investment will be submitted to the 
Regulated Fund's Eligible Directors. The Board of any Regulated Fund 
may at any time rescind, suspend or qualify its approval of pro rata 
dispositions and Follow-On Investments with the result that all 
dispositions and/or Follow-On Investments must be submitted to the 
Eligible Directors.
    11. No Non-Interested Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than through 
share ownership in one of the Regulated Funds.

Applicants' Legal Analysis

    1. Section 57(a)(4) of the Act prohibits certain affiliated persons 
of a BDC from participating in joint transactions with the BDC or a 
company controlled by a BDC in contravention of rules as prescribed by 
the Commission. Under section 57(b)(2) of the Act, any person who is 
directly or indirectly controlling, controlled by, or under common 
control with a BDC is subject to section 57(a)(4). Applicants submit 
that each of the Regulated Funds and Affiliated Funds could be deemed 
to be a person related to each Regulated Fund in a manner described by 
section 57(b) by virtue of being under common control. Section 57(i) of 
the Act provides that, until the Commission prescribes rules under 
section 57(a)(4), the Commission's rules under section 17(d) of the Act 
applicable to registered closed-end investment companies will be deemed 
to apply to transactions subject to section 57(a)(4). Because the 
Commission has not adopted any rules under section 57(a)(4), rule 17d-1 
also applies to joint transactions with Regulated Funds that are BDCs. 
Section 17(d) of the Act and rule 17d-1 under

[[Page 61264]]

the Act are applicable to Regulated Funds that are registered closed-
end investment companies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission considers 
whether the company's participation in the joint transaction is 
consistent with the provisions, policies, and purposes of the Act and 
the extent to which such participation is on a basis different from or 
less advantageous than that of other participants.
    3. Applicants state that in the absence of the requested relief, 
the Regulated Funds would be, in some circumstances, limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions will ensure that the Co-Investment Transactions are 
consistent with the protection of each Regulated Fund's shareholders 
and with the purposes intended by the policies and provisions of the 
Act. Applicants state that the Regulated Funds' participation in the 
Co-Investment Transactions will be consistent with the provisions, 
policies, and purposes of the Act and on a basis that is not different 
from or less advantageous than that of other participants.
    4. Under Condition 16 below, if the Advisers, the principals of any 
of the Advisers (the ``Principals''), or any person controlling, 
controlled by, or under common control with the Advisers or the 
Principals, and the Affiliated Funds (collectively, the ``Holders'') 
own in the aggregate more than 25 percent of the outstanding voting 
shares of a Regulated Fund (the ``Shares''), then the Holders will vote 
such Shares as directed by an independent third party (such as the 
trustee of a voting trust or a proxy adviser) when voting on (1) the 
election of directors; (2) the removal of one or more directors; or (3) 
any matters requiring approval by the vote of a majority of the 
outstanding voting securities, as defined in section 2(a)(42) of the 
Act. Applicants believe that this Condition will ensure that the Non-
Interested Directors will act independently in evaluating the Co-
Investment Program, because the ability of the Advisers or the 
Principals to influence the Non-Interested Directors by a suggestion, 
explicit or implied, that the Non-Interested Directors can be removed 
will be limited significantly. Applicants represent that the Non-
Interested Directors shall evaluate and approve any such voting trust 
or proxy adviser, taking into account its qualifications, reputation 
for independence, cost to the shareholders, and other factors that they 
deem relevant.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
Conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for an Affiliated Fund or another Regulated Fund that falls 
within a Regulated Fund's then-current Objectives and Strategies, the 
Regulated Fund's Adviser will make an independent determination of the 
appropriateness of the investment for such Regulated Fund in light of 
the Regulated Fund's then-current circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, it will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Funds, collectively, in the same transaction, exceeds the amount of the 
investment opportunity, the investment opportunity will be allocated 
among them pro rata based on each participant's capital available for 
investment in the asset class being allocated, up to the amount 
proposed to be invested by each. The applicable Adviser will provide 
the Eligible Directors of each participating Regulated Fund with 
information concerning each participating party's available capital to 
assist the Eligible Directors with their review of the Regulated Fund's 
investments for compliance with these allocation procedures.
    (c) After making the determinations required in Conditions 1 and 
2(a), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each participating Regulated Fund and 
Affiliated Fund) to the Eligible Directors of each participating 
Regulated Fund for their consideration. A Regulated Fund will co-invest 
with one or more other Regulated Funds and/or one or more Affiliated 
Funds only if, prior to the Regulated Fund's participation in the 
Potential Co-Investment Transaction, a Required Majority concludes 
that:
    (i) the terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) the interests of the shareholders of the Regulated Fund; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated 
Funds would not disadvantage the Regulated Fund, and participation by 
the Regulated Fund would not be on a basis different from or less 
advantageous than that of other Regulated Funds or Affiliated Funds; 
provided that, if any other Regulated Fund or Affiliated Fund, but not 
the Regulated Fund itself, gains the right to nominate a director for 
election to a portfolio company's board of directors or the right to 
have a board observer or any similar right to participate in the 
governance or management of the portfolio company, such event shall not 
be interpreted to prohibit the Required Majority from reaching the 
conclusions required by this Condition (2)(c)(iii), if:
    (A) the Eligible Directors will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Regulated Fund's Board with respect to the actions of 
such director or the information received by such board observer or 
obtained through the exercise of any similar right to participate in 
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Affiliated Fund or any 
Regulated Fund or any affiliated person of any Affiliated Fund or any 
Regulated Fund receives in connection with the right of an Affiliated 
Fund or a Regulated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or management of 
the portfolio company will be shared proportionately among the 
participating Affiliated Funds (who each may, in turn, share its 
portion with its affiliated persons) and the participating Regulated 
Funds in proportion to the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, the Affiliated Funds or the

[[Page 61265]]

other Regulated Funds or any affiliated person of any of them (other 
than the parties to the Co-Investment Transaction), except (A) to the 
extent permitted by Condition 13, (B) to the extent permitted by 
section 17(e) or 57(k) of the Act, as applicable, (C) indirectly, as a 
result of an interest in the securities issued by one of the parties to 
the Co-Investment Transaction, or (D) in the case of fees or other 
compensation described in Condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential Co-Investment Transaction or to invest less than the 
amount proposed.
    4. The applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Funds during the preceding quarter that fell within 
the Regulated Fund's then-current Objectives and Strategies that were 
not made available to the Regulated Fund, and an explanation of why the 
investment opportunities were not offered to the Regulated Fund. All 
information presented to the Board pursuant to this Condition will be 
kept for the life of the Regulated Fund and at least two years 
thereafter, and will be subject to examination by the Commission and 
its staff.
    5. Except for Follow-On Investments made in accordance with 
Condition 8,\10\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, Affiliated Fund, 
or any affiliated person of another Regulated Fund or Affiliated Fund 
is an existing investor.
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    \10\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Fund and Affiliated 
Fund. The grant to an Affiliated Fund or another Regulated Fund, but 
not the Regulated Fund, of the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
an observer on the board of directors or similar rights to participate 
in the governance or management of the portfolio company will not be 
interpreted so as to violate this Condition 6, if Conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, 
exchange or otherwise dispose of an interest in a security that was 
acquired in a Co-Investment Transaction, the applicable Advisers will:
    (i) notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating 
Affiliated Funds and Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this Condition. 
In all other cases, the Adviser will provide its written recommendation 
as to the Regulated Fund's participation to the Eligible Directors, and 
the Regulated Fund will participate in such disposition solely to the 
extent that a Required Majority determines that it is in the Regulated 
Fund's best interests.
    (d) Each Affiliated Fund and each Regulated Fund will bear its own 
expenses in connection with any such disposition.
    8. (a) If any Affiliated Fund or any Regulated Fund desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable Advisers will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in the 
application). In all other cases, the Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such Follow-On 
Investment solely to the extent that a Required Majority determines 
that it is in the Regulated Fund's best interests.
    (c) If, with respect to any Follow-On Investment:
    (i) the amount of the opportunity is not based on the Regulated 
Funds' and the Affiliated Funds' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Adviser to be invested 
by each Regulated Fund in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Affiliated Funds in 
the same transaction, exceeds the amount of the opportunity; then the 
amount invested by each such party will be allocated among them pro 
rata based on each participant's capital available for investment in 
the asset class being allocated, up to the amount proposed to be 
invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
Condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other Conditions set forth in this 
application.
    9. The Non-Interested Directors of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds or Affiliated Funds that the 
Regulated Fund considered but declined to participate in, so that the 
Non-Interested Directors may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the Conditions of the Order. In addition, the Non-Interested Directors 
will consider at least annually the continued appropriateness for the 
Regulated Fund of participating in new and existing Co-Investment 
Transactions.

[[Page 61266]]

    10. Each Regulated Fund will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Funds were a 
BDC and each of the investments permitted under these Conditions were 
approved by the Required Majority under section 57(f) of the Act.
    11. No Non-Interested Director of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
    12. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the Securities Act) will, to 
the extent not payable by the Advisers under their respective 
investment advisory agreements with Affiliated Funds and the Regulated 
Funds, be shared by the Regulated Funds and the Affiliated Funds in 
proportion to the relative amounts of the securities held or to be 
acquired or disposed of, as the case may be.
    13. Any transaction fee (including break-up or commitment fees but 
excluding broker's fees contemplated by section 17(e) or 57(k) of the 
Act, as applicable), received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Funds 
and Affiliated Funds on a pro rata basis based on the amounts they 
invested or committed, as the case may be, in such Co-Investment 
Transaction. If any transaction fee is to be held by an Adviser pending 
consummation of the transaction, the fee will be deposited into an 
account maintained by such Adviser at a bank or banks having the 
qualifications prescribed in section 26(a)(1) of the Act, and the 
account will earn a competitive rate of interest that will also be 
divided pro rata among the participating Regulated Funds and Affiliated 
Funds based on the amounts they invest in such Co-Investment 
Transaction. None of the Affiliated Funds, the Advisers, the other 
Regulated Funds or any affiliated person of the Regulated Funds or 
Affiliated Funds will receive additional compensation or remuneration 
of any kind as a result of or in connection with a Co-Investment 
Transaction (other than (a) in the case of the Regulated Funds and the 
Affiliated Funds, the pro rata transaction fees described above and 
fees or other compensation described in Condition 2(c)(iii)(C); and (b) 
in the case of an Adviser, investment advisory fees paid in accordance 
with the agreement between the Adviser and the Regulated Fund or 
Affiliated Fund.
    14. The JMPG Proprietary Accounts will not be permitted to invest 
in a Potential Co-Investment Transaction except to the extent the 
aggregate demand from the Regulated Funds and the other Affiliated 
Funds is less than the total investment opportunity.
    15. Each Adviser will maintain written policies and procedures 
reasonably designed to ensure compliance with the foregoing Conditions. 
These policies and procedures will require, among other things, that 
each Adviser will be notified of all Potential Co-Investment 
Transactions that fall within the then-current Objectives and 
Strategies of any Regulated Fund it advises and will be given 
sufficient information to make its independent determination and 
recommendations under Conditions 1, 2(a), 7 and 8.
    16. If the Holders own in the aggregate more than 25% of the 
outstanding Shares of a Regulated Fund, then the Holders will vote such 
Shares as directed by an independent third party (such as the trustee 
of a voting trust or a proxy adviser) when voting on (1) the election 
of directors; (2) the removal of one or more directors; or (3) any 
matters requiring approval by the vote of a majority of the outstanding 
voting securities, as defined in section 2(a)(42) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25760 Filed 10-8-15; 8:45 am]
BILLING CODE 8011-01-P